Correction to This Article
A Jan. 16 photo caption incorrectly described Alexander Annenkov as a lawyer for the Russian conglomerate Inteko. He is an executive at Inteko-Agro, a subsidiary.

Russian Case Shows No Holds Barred in Business and Politics

Alexander Annenkov, left, an executive with the Russian firm Inteko-Agro, with Moscow Mayor Yuri Luzhkov in 2005. The administration of the Belgorod region has been implicated by some in an attack on Annenkov in October.
(Courtesy Of The Press Service Of Inteko-agro)

BELGOROD, Russia -- Three assailants emerged from the darkness in the stairwell of Alexander Annenkov's apartment building and knocked him to the floor, a short-handled ax slicing into his thigh. Screaming, Annenkov raised his right arm against another stroke of the ax, and his hand was almost severed, he recalled. "The last blow was with the handle on my head," said Annenkov, 29, who was found unconscious by neighbors. "I don't think they were trying to kill me. It was a message."

The message, he contends, was aimed at the very powerful company that employs him: the conglomerate Inteko, controlled by Russia's only female billionaire, Yelena Baturina.

Within hours of the assault Oct. 9, a Russian government medevac plane, arranged for by Baturina's husband, Moscow Mayor Yuri Luzhkov, took off for this city near the Ukraine border to bring the gravely injured executive back to a hospital in the capital. Accompanying it was the company's private jet, carrying a senior executive to lend support to the colleague.

The attack came as Baturina and a group of her political allies were taking on Belgorod Gov. Yevgeny Savchenko and his own business supporters. The governor opposes Baturina's effort to turn nearly 250,000 acres of Soviet-era collective farmland into a modern agribusiness. He has denied on local television that he used violence against Baturina's executive.

The controversy opens a window on an enduring feature of life across Russia: the high-stakes battles between clans of politicians and business leaders. Elections, the courts, the bureaucracy and the news media all become weapons in these bitter contests. President Vladimir Putin's efforts to centralize power, including his decision to abolish the election of local governors and appoint them from the Kremlin, have yet to tame these regional struggles over property and power. Arbitrary rule, corruption and violence remain endemic in the conflicts.

In Belgorod, the two sides have so far fought each other to a standstill. Many peasants had hoped that Inteko would bring jobs and prosperity to the region, 400 miles south of Moscow. Instead, court decisions stemming from the conflict suspended cultivation of thousands of acres of farmland, and looters and arsonists have razed farm buildings.

In a country where rule of law remains fragile 15 years after the fall of communism, company executives say that doing business in Russia routinely involves corruption and official coercion. The Cato Institute's economic freedom index, which evaluates business conditions globally, based on criteria such as the state's influence over the judicial system and the protection of ownership rights, ranks Russia 115th in the world.

With tens of millions of dollars of investment frozen, the protagonists in the Belgorod conflict have appealed to Putin to step in. So far he has remained silent. He has little incentive to intervene: Both Gov. Savchenko and Mayor Luzhkov are members of the pro-Kremlin United Russia party.

A Duel of Titans

Savchenko, appointed governor of Belgorod by President Boris Yeltsin in 1993 and elected to the post in 1995, is famous in Russia for his puritanical youth policies. There is a 10 p.m. curfew on everyone under 18, swearing is banned, and the numbers of dancers in local nightclubs is limited to a decorous two per square yard.

Baturina is perhaps Russia's best-known businesswoman, with extensive interests in construction and plastics. She has built an empire in her husband's city, Moscow, and in recent years has been diversifying her interests. Her venture into agriculture was one such initiative.

One day after the assault on Annenkov, Baturina's lead attorney in the matter was severely beaten in the hallway of his Moscow apartment. Dmitry Shteinberg died two days later without regaining consciousness.

"The latest tragic events in Belgorod and in Moscow indicate that the opposition of the Belgorod administration to Inteko-Agro's activity in the region has acquired a new character -- criminal," Baturina later said in a statement, referring to the Inteko subsidiary involved in the venture. "Belgorod is turning into a criminal capital of Russia in front of everybody. Criminal methods are used to stifle freedom of speech and freedom of entrepreneurship."